December 01, 2006	Friday	Ziqa'ad 9, 1427

ISLAMABAD, Nov 30: Pakistan's first-ever initiative to have freer trade with others appears to be counterproductive as its exports to Sri Lank saw a nominal increase while imports made a quantum jump in the first year of the free trade agreement (FTA).

In first year (2005-06) of FTA implementation, Pakistan's exports to Sri Lanka stood at $159.212 million, up by 2.17 per cent in real term as against the pre-FTA export of $155.830 million -- a negative phenomenon, when see in the context of overall growth of 41.4 per cent in exports during the same year.

On the other hand, Sri Lanka exported products worth $71.288 million to Pakistan, up by 59.07 per cent from $44.813 million exports in the pre-FTA year.

At the signing of the FTA it was believed that the annual trade volume between the two countries would double within first year due to an increase in trade in tea, textiles, betel leaves and other items.

Official statistics compiled by Federal Bureau of Statistics (FBS) showed that the total volume reached $230.5 million during the first year of the FTA as against $200.643 million in pre-FTA period, showing an increase of 14.88 per cent.

An official on condition of anonymity told Dawn that the opening up of each other's markets would mean free trade in agricultural products, textiles, medicines, tea, rubber and several other commodities, which had so far been held back mainly because of a stricter trade regime and higher tariffs on the part of Sri Lanka.

However, for the last 10 years the balance of bilateral trade remained in favour of Pakistan. Tea was one of Pakistan's major imports but the bulk of it was being outsourced at a very high price from Kenya, the official added.

Sri Lanka's export of tea under the FTA to Pakistan stood at $8.014m as against $6.577 million in previous year; oil seeds $14.354 million as against $11.231 million; crude rubber $17.293 million as against $9.730 million; crude vegetable $6.766 million as against $4.001 million; and fruits and vegetables $5.646 million as against $3.068 million.

Pakistan's export of rice declined to $3.728 million under the FTA from $24.089 million in the previous year; cotton fabrics (woven) rose to $87.549 million from $54.729m; and iron and steel surged to $7.396 million from $6.9 million. Exports of all other products remained below the figure of million.